Innovation

The purpose of the learning is for you to develop your own learning. There are a number of tasks that you should complete before you undertake the next section. You can work through this section at your own pace. It is expected that you would take up to 3 hours to complete this section.  You must complete this section before you move to the next section.

Task 1

Read the article “Dimensions of Change”

This introduces the activity

Dimensions of Change

A small bakery produces bread for the mass market bread.  However there is fierce competition from other local bakeries and supermarkets.  After some research the baker sees an opportunity to change her business to meet this competition.  She discovers that the two other small bakers and the two supermarkets focus solely on mass produced bread.  Talking to both her customers and the supermarket customers she realises that there is a market for high quality artisan bread. 

The introduction of one or two new lines would not diminish the direct competition as the baker would still be relying on mass produced bread for most of her income.  Introducing the one or two new items is also not sustainable as the customers would not necessarily identify the baker as being different.  So, incremental changes to the production of bread would not work.  Radical changes to one or two items also would not work because the baker would still be selling mass produced bread and would still face the same competition.  The research suggested that she need to completely differentiate the bakery from all the other bread outlets.  Consequently, the baker chose to radically change the bread she made. 

The baker needed to identify how those radical changes would implement and undertook an analysis of the solution using the 4Ps mentioned in Unit 3 OLL 2.  In the table below you can see the changes that the baker introduced.

You can see a number of elements from previous units in this table.  For example, in the section on pattern recognition we mentioned things like shape and taste as critical factors.  You can also see the elements that make the radical system change actually work.  The products are substantial different to mass produced bread in that the baker is using different flours and other ingredients, along with changes in the shape of the loaves of bread.  By producing the bread by hand the loaves move away from the traditional notion of bread and take on the notion of almost being a new product.  The position in the market changes radically.  The loaves of bread become high value speciality products which leads to a change in the way customers view the business.  The bakery moves from the mass market to a niche market.

You should recognised a number of factors from past Units such as pattern recognition and the different levels of innovation.

Task 2

Read the “Case Study ” and complete the activity in your workbook

This activity enables you to develop your skills at analysing innovative solutions

Case Study

This case study was introduced in the SDL1 for this Unit.  It applies the concepts in this task and will continue to be part of the next few tasks.

Problem

You run a small online business selling small items that fit in an envelope.  Previous you ran your business from a large garage in your garden.  Each you would print the orders on separate sheets.  The taking one order at a time you would collect the items from the shelf place them in an envelope before sealing the envelope and placing the item in the postal collection box.  It took no more than 2 minutes to complete the order.  

However, your business has grown and you now run your business from a large warehouse. You still print each order on separate sheets but due to the size of the warehouse it now takes 3 minutes and 30 seconds to complete each order separately.  This additional 1 minute and 30 seconds means that over 15% of orders are going out a day late and you cannot catch up.  Customer complaints are beginning to affect your rating online.

Ideas

The ideas ranged from employing extra staff, putting popular products close to the front of the warehouse, introduce a catalogue system so staff knows exactly where products are, baskets or trolleys to collect items, changing the delivery times, prepacking items and many others.

Type of Need

This is an everyday problem that requires a specific solution.

Importance of need

Extremely high, this sort of business is reliant on high levels of customer satisfaction, price differentiation is almost impossible to achieve as online retailing is very transparent. If the rating drops below 93% of 4.5 stars then sales will drop.

Cause of need

The need was caused by the relocation to larger premises.  While moving meant the number of products sold could double, it also created several logistic problems this being the main one.  We used the 5 whys tool.

Parameters

There were three parameters, one was cost.  Moving the business had used up the cash reserves and until sales increased through more products there were no funds to spend.  The second parameter was time, the solution had to be found and applied within two days.   The last parameter was that the solutions had to be viable at least until sales and therefore profits reach a level that cash reserves were replenished and there was enough to consider alternative solutions.

Solution

Several solutions were considered and tested.  In the end the most cost effective solution was to purchase 3 supermarket shopping trolleys.  They worked for a number of reasons.  Firstly was size, although most products sold are quite small once they are in the envelopes they are quite bulky.  The shopping trolley was able to take more filled envelopes than a staff member could carry, and when the trolley was full it was still relatively light enough to push back to the despatch area. The child seat was ideal to hold the empty envelopes and the order lists in an orderly way.  The trolleys were robust and quite cheap.

Using the 4Ps analyse the solution utilised by this business.  You need to answer the question in your workbook.

You should undertake further reading on the topics in this section.  We recommend that you read the following:

• Bessant, J. & Tidd, J., (2015), Innovation and Entrepreneurship, 3rd Edition, Wiley, Chichester

• Michanek, J. & Breiler, A. (2014) The Idea Agent, The Handbook on Creative Processes, New York: Routledge

The next section is Unit 3 OLL 3